The Consumer and Small Business

THE CONSUMER AND
SMALL BUSINESS
Hon. William E. Borah
of Idaho
February 7, 1934
Printed in the Congressional Record of
February 8, 1934
(Not printed at Government expense)
Radio address
by
39598—9824
United States
Government Printing Office
Washington : 1934
RADIO ADDRESS
BY
HON. WILLIAM E. BORAH
Mr. NYE. Mr. President, I ask unanimous consent that
there may be printed in the Appendix of the RECORD a very
splendid address delivered over the National Broadcasting
chain last night by the senior Senator from Idaho [Mr.
BORAH].
There being no objection, the address was ordered to be
printed in the RECORD, as follows:
I am. deeply indebted to the National Broadcasting Co. for an
opportunity to discuss with you tonight a matter which seems
to me of very great moment.
Upon the subject which I am going to discuss, I have received
in the last few months thousands of letters, sometimes as high
as 300 letters a day. Necessarily, I cannot make answer personally
to all of these letters. X am in a sense undertaking to reply to
these letters tonight. I feel doubly indebted to the broadcasting
company for the opportunity.
The questions are two—but in a sense one and the same. The
first question is: Can the people, particularly the less-well-to-do
people of this country, and that constitutes now about 90 percent
of our people, be protected from unjust and extortionate prices
now imposed upon them through the price-fixing methods of
combines, trusts, and monopolies? Can those who, through great
industry and self-denial, are endeavoring to pull themselves out
of their present economic distress, be shielded from the cruel
exactions of monopolies? There are millions of people in our
country still in want of sufficient means to properly feed and
clothe and educate their families (a million children, it has been
published, are kept out of school in one city for want of proper
nourishment), who are now being driven to a still lower standard
of living because prices have been fixed at a point beyond their
reach. They are compelled to still further deny themselves
and their families the things they sorely need. And these prices
are being fixed without restraint, without hindrance, by combina­tions
and monopolies, passing under the euphonious terms of
" trade associations ", and the prices are being fixed regardless of
humanity or justice. This is the first question.
The second question is this: Can small business be rescued
from ruin—small business, independent business, which is the
real economic strength and backbone of the Nation? The same
combinations and monopolistic methods which are fixing prices
for the people generally are, through price-fixing and other mo­nopolistic
methods, destroying small business. This may seem
a strong statement, but it is not too strong; it is true. It can
be proven by the facts. I received in one day over 50 letters from
small business firms alone scattered throughout the land. These
letters tell the story of the battle which they are waging for
existence. In many instances the battle has been lost. The
second question, therefore, is: Can small business be saved from
utter destruction?
In order to fully understand this situation it is necessary to
go back in history. When the Industrial Recovery Act came be-
39598—9824 (3)
4
fore the Senate for consideration at the last session it provided
for the suspension of the antitrust laws, for all laws which had
for their purpose the control and restraint of combines and mo­nopolies.
When it came to be considered in the Senate I offered
an amendment for the purpose of restoring these antitrust laws.
The amendment was adopted by the Senate. It went to con­ference
and was there stricken out. A generalization with ref­erence
to monopolies was inserted which has proven wholly in­effective.
So the National Recovery Act became a law with a
provision therein suspending all antitrust laws. All effective con­trol
or restraint upon these powerful combinations were re­moved.
They have made good their opportunity.
It is my contention that the antitrust laws should be restored
and that they should be enforced. I do not believe it is possible
to protect the people of this country from exorbitant and unjust
prices or to save small business from utter ruin if these great
combines and monopolies are permitted to go unrestrained and
uncontrolled. I may say that I have pending now an amendment
to the Industrial Recovery Act which would restore the antitrust
laws.
It was thought by some, and is still by some contended, that
the antitrust laws, if in full effect, would conflict with the ad­ministration
of the National Recovery Act. If the National Re­covery
Act is to be executed and administered in harmony with
its true terms and its declared purposes, the antitrust laws would
not be a hindrance but a distinct assistance in its administration.
Neither in practical effect, in moral effect, or in law, is there any
conflict between the National Recovery Act and the antitrust
laws. The principal contention as to this phase of the matter
came from those who were most anxious to get rid of the anti­trust
laws and the principal objection to restoring the antitrust
laws comes from the same source. It is my contention that this
is a poor subterfuge, that these two bodies of law, the antitrust
and the National Recovery laws, can be made to work in per­fect
harmony for the welfare of the great body of the American
people. It is also my contention that unless the antitrust laws
are restored and enforced, the American people will continue to
be pillaged and robbed through extortionate prices and that small
business will continue to be crushed and driven into bankruptcy.
If the antitrust laws are not necessary for the protection of the
people and the N.R.A. can, without the aid of the antitrust laws,
protect the consumers and small businessmen, then why has it
not done so, and why does it not do so? What I am asking
tonight is: Who is responsible for these exorbitant prices and
for the harassing and destruction of small business? Everything
which the average person engaged in manual labor must pur­chase
has risen in price all the way from 67 percent to 150 per­cent.
Cotton towels have risen 87 percent. Did the N.R.A. do
that or consent to that, or was it those who sit about a table
and fix the prices of these articles? And if its machinery with­out
the aid of the trust laws can prevent such things, why is it
not used? Children's hosiery has risen 94 percent. Who is re­sponsible
for that? Men's wear, such as men's socks, have risen
67 percent; cheap shirts, 72 percent; overalls, 110 percent. This
is rather an important item to a large body of people in the
United States, whose purchasing power is at the lowest ebb. Who
is responsible for this, picking the meager pockets of the working-man?
I contend it is the result of combines, price fixing. Who
is it that is contending the N.R.A. is responsible for it?
I have a letter in my files from an elderly lady from the South
who says: "I am sending you a sample of knitting cotton which
sold last spring—1933—for 50 cents a pound. Now I must pay
90 cents a pound." And she asks, " Who gets this large profit? "
5Tes; who does? It is "my contention that the few who control
the sale of this particular product have raised the price nearly
double. I ask: Does the National Recovery Act and those who
39598—9824
5
are administering it need any help to prevent this extortion?
Has the " blue eagle " become a hawk? Certainly not. What is
happening is this. While the N.R.A. is seeking to restore purchas­ing
power, monopoly hovers around, soars down like a bird of prey
upon the citizen, and not only takes all gain from the laborer,
from the farmer, from the people generally but, while taking is
good, it takes more than the gain assured by the N.R.A. And
while it is in the act of extortion it is screaming " chiseler " to
all who object to being fleeced.
According to a monthly survey of business, put out by the
American Federation of Labor sometime ago, a 6-percent increase
in wages was more than eaten up by an 8.5-percent increase in
living costs. In other words, the laborer is more than paying as
a consumer for his increase in wages. He is worse ofl by 2.5 per­cent
than he was last March. Using the figure of 100 to represent
pre-war prices, the Bureau of Agricultural Economics index
showed farm prices on August 15 at 72, as compared with 76 on
July 15, and 64 on June 15. The prices of things the farmer buys
were 103 on June 15, or 3 points over the pre-war. This moved
to 107 on July 15 and reached 112 on August 15. What a perfect
scheme. As the farmer's prices increase, the prices of the things
which he has to buy increase so as to remove all possible gain to
the farmer. Just so long as a few men sit about and fix prices
upon the things which the farmer has to buy, the farmer will
never be able to enjoy that equality with industry which has
been promised. Those who can control prices can always keep
just ahead of the prices of the commodities from the farm.
At the present time it is perfectly clear that monopoly is
gathering up everything which the average man and woman might
reap in the way of benefit from the present recovery program.
These monopolies and combines can, so long as they have unre­strained
power to fix prices, deprive the people of any opportunity
to make any real gains in their income or in their standard of
living. With the antitrust laws suspended these monopolies are
restrained neither by the feelings of remorse, the stings of con­science,
or the fear of punishment. They are now free and un­trammelled
to extort the last cent they can from the people of this
country and to harass and drive small business to its desperation
and ruin.
Let me quote briefly from letters of small business. Under date
of January 22, from New York, the writer says: "In almost every
industry there are large units. These large units are made up of
a number of concerns being merged together. In ninety-nine cases
out of a hundred, where these mergers take place the concerns
are overcapitalized. Now these concerns that are overcapitalized
attempt to make a profit on the overcapitalization with the re­sult
they have to get exceptionally high prices for their merchan­dise.
Such concerns are not able to compete with small units
except by price fixing. And if they can fix the prices for the
entire industry, they will naturally fix them high enough for
themselves to make a profit. And if the little man should get the
business, he would make a profit out of all proportion to what he
was entitled and what he would ask for if he were permitted to
sell the goods in his own way. But the real trouble exists where
one price is fixed in an industry, the larger units are usually
the people who get all the business and the small units get
nothing."
Here is the secret, both of high prices and of injury to small
business. The people are paying on overcapitalization and are
not permitted to pay on the basis of honest capitalization. The
high prices they are compelled to pay not only covers overcapitali­zation
but they cover high salaries, and many of them. Small
business is not permitted to sell upon a basis of honest capitaliza­tion
or reasonable salaries.
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6
Another letter under date of January 30 says: " There may be a
lot of good in the N.R.A., and incidentally there may be a lot of
harm. In the opinion of the writer, unless immediate steps are
taken to correct the representation constantly being made by
monopolies, it will only hasten the time when there will be no
need for the N.R.A. May I ask if the N.R.A. is supposed to help
the masses, or is it supposed to add more money into the pockets
of the very selfish class? " This is a business house in Brooklyn.
Let me say to the writer that the N.R.A. is supposed to benefit
the masses. The law was passed for that purpose. The objective
was a righteous one. But monopoly put one over on the framers
of the National Recovery Act in securing a repeal or suspension—
which amounts to the same thing—of the antitrust laws. It is a
notorious fact that big business made it known they were not
willing to get in and cooperate unless the trust laws were sus­pended
or repealed. For thirty-odd years an effort has been put
forth here in Washington to repeal or emasculate the antitrust
laws. Here was the opportunity and they succeeded. And the
people are paying for the mistake.
A business house from Kansas City, Mo., writes: "Entrenched
industry and capitalistic industries can use this new set-up even
more selfishly than they were able to use it under old methods."
The writer goes on to state how, through monopolistic practices,
such as price-fixing, they are ruining small business. Another
small business firm in Brooklyn says: "Representing a small busi­ness
struggling for existence, we are at the mercy of monopolies
who control raw material and consequently prices. Under the
guise of the N.R.A., the industries have raised prices 30
percent on items the price of which was the same from 1928 to
about 1933."
A business firm from Wisconsin says: "They themselves tell us
that if we were to ask 20 manufacturers for quotations,
their prices would be so identical as not to vary one cent. Not
only that, salesmen now openly boast that their concerns
have a large bond posted with the ring, which is to be for­feited
the minute they cut the prices set by the combine. Many
of these companies have boosted their prices by 60 percent, with
no excuse of processing taxes to Justify this advance." Another
letter from a business man at Jacksonville, 111., says: "Without
the antitrust laws in effect, small business cannot survive."
I shall not, for want of time, quote further. But these letters
are coming from all parts of the United States and from men
anxious to keep in the recovery program. But they also want the
right to live, to continue business. And it is the duty of the
Government to all that they enjoy the right to live and continue
business.
Since this discussion about the small business man has arisen,
I had a conversation with one of the prominent figures in one
of the great industries in the country which is under a code. I
do not feel justified in using his name, but he made this state­ment:
"Senator, you must realize that the small business man
is passing out. He does not belong in our modern industrial
development. It is not in the interest that a business should
be conducted upon the theory that he must be retained. It is
natural for us to sympathize with him, but the philosophy of the
present constructive program is against him."
Gasoline is a necessity, as modern society is now organized,
to the American public in an extent exceeding 2 y2 pounds daily,
for every man, woman, and child in the United States. Its price
is, therefore, almost as critical as the price of bread and meat.
The domestic consumption of gallons in the year 1933, as reported
by the United States Bureau of Mines, was 378,143,000 barrels, 42
gallons each; 378,143,000 multiplied by 42 makes 15,882,006,000
gallons. An increase of 1 cent in the retail price per gallon
means an increase of $158,820,060 annually, or $435,000 daily, at
39598—9824
7
the 1933 rate of consumption. Since last June the price of gaso­line
has increased over 30 percent. In June it was about 12'/2
cents a gallon and has gone up to an average of 16 cents a gallon.
The major companies are in a position to fix prices and to drive
out of business the small independent oil men.
My State produces a large amount of lumber. 1 know most of
those engaged in the business. Naturally I have only the friend­liest
feeling for the industry. But let me call your attention to a
statement furnished me by a western lumber company. This
statement says:
" In the week of February 5 to 11, 1933, we sold retail $276.18
worth of lumber consisting of 120 different items. On November 3.
1933, our retailed price on. this same material was $445.49, showing
an increase of 61 percent over the February 1933 prices. Today's
price (Feb. 1, 1934) is $484.90, an increase of 9 percent over
November 3, 1933, prices, and 75 percent over February 1933. And
now, under the new minimum selling price established by the
code, this selling price has increased another $71.40 to $556.30, a
jump overnight of 15 percent and 25 percent over November 3,
1933, prices, and 101 percent, or more than double, the February
1933 prices. These exact figures are taken from our records."
Balzac, the great French novelist, once said that money never
loses an opportunity to be stupid. It seems to me that economic
power never loses an opportunity to be stupid. These prices will
in the end injure the lumber industry. People who want to build
a home will not build a home; they cannot build it. Farmers who
want to improve their barns and granaries or build new ones will
not do so. They will either do without or find substitutes. But
such is the program that is now being carried out.
The Secretary of the Interior, Mr. Ickes, is a hard-working, able,
conscientious, courageous public servant. But he has some most
peculiar ideas. It is difficult to understand him. To illustrate:
He believes that the taxpayers who must pay these great bills are
entitled to some protection. He insists on competition in the
matter of bidding for public works. He believes the Government
cahnot be protected if these bidders for public works are permitted
to get together and put in the same bids. He goes so far as to
say these people who get together and put up prices on the Gov­ernment
are crooks, or something to that effect. And he seems to
think they are such, regardless of what their politics may be.
Now, Mr. Ickes has been much criticized for these ideas. But
I venture to think he is right. The taxpayer ought to be protected
and the Government ought not to be jipped by a combination of
bidders. But if the Government is entitled to the benefit of com­petition,
if the Government is entitled to protection against fixed
bids and thereby fixed prices, are not the people entitled to pro­tection
against price fixing? If a farmer wants, for instance, to
buy a farm implement, he could travel from San Francisco to New
York and he would, I suspect, find the price the same all the way
along, fixed by somebody and fixed at an unconscionable point.
If a workingman wants to buy a pair of overalls, he might travel
from the Canadian line to the Gulf, but he would likely find the
same price. And he would further find that if some small business
man felt that, owing to his less highly watered business, he was
willing to sell for a lower price, he would be put in jail. Now, my
friends, this is all wrong. It is an injustice to the whole people.
And in many instances and in many respects it cannot be de­fended
morally any more than the exactions of Dick Turpin on
the London road.
Billions of dollars are being expended by the Government to
restore prosperity. When the game is played through, in whose
possession is this money? Largely in the possession of trade asso­ciations,
combines, and monopolies, which have the power to fix,
and are fixing, prices. If workingmen get a little higher wage, it
is taken away by the higher prices of things they must buy, and
they are unable to save a dollar. If the average man or woman
39598—9824
makes a gain somewhere, the cost of living goes up and they are
no better off—the situation is not changed. If the farmer receives
some benefit from some policy of the A.A.A., the monopolies and
combines, which operate under the N.R.A., take it away. Last
summer when the packers came to the conclusion that the con­sumers
would not carry the processing tax, they made themselves
safe by reducing the price of hogs. Play the game as you will, the
monopolies, who are able to fix prices, will win.
What benefit is it to the laborer to raise wages if a few com­panies
may raise prices to rob him of the benefit of the raise in
wages? What is the use to kill pigs and reduce acreage if the
harvester combine, the packers, and the major oil companies can
put up prices so as to grab off to themselves all the benefits?
Until we can increase the purchasing power of the masses, until
they can buy more, not less, as they are doing now, until they
can make some savings, there can be no permanent prosperity.
Prices should be kept down within reason and the price of labor
raised and unemployment decreased. When that is done the
increased demand for goods, for the things which men and women
must have in order to live, that of itself will stimulate business,
and that stimulation will normally raise the prices of articles
which the people need. But to raise prices first, as monopoly is
doing, is simply to hold labor down, likewise the producer, to the
bare level of existence. With the price-fixing power in the hands
of those interested in charging all the traffic will bear, there is no
hope of restoring the purchasing power of the masses and no hope
of prosperity until that is done.
When these conditions are pointed out someone goes into a
trance and begins to ejaculate about how we cannot go back to
" rugged individualismthat we have arrived at a new era, the
era of planned industrialism. I do not care to enter into a dis­cussion
as to the merits or demerits of rugged individualism or of
planned industrialism. So far as the subject I am discussing
tonight is concerned, I am not interested in that question. What
I have to say is that it matters little what you call it; if com­bines,
trusts, and monopolies dominate the program, it is just the
same to the people, whether you call it rugged individualism or
planned industrialism. It makes little difference to the consumer
paying extortionate prices or to small business fighting for its
life against monopolies whether you call the process rugged indi­vidualism
or planned industrialism. If monopoly is permitted to
have :ts way under both schemes, permitted to fix the rules of
the ga...e under both schemes, the results are the same to the
people. Any scheme, whatever you may call it, which does not
protect the individual citizen from unjust charges and prices,
which fails to insure to him economic Justice; any scheme which
does not give small and independent business a fair chance in the
struggle for existence, is a libel upon government, a travesty upon
justice, and a brutal indefensible system, regardless of whether
you call it new freedom, old freedom, rugged individualism, or
planned industrialism. The test is whether the citizen is free
from these injustices and is permitted to have his portion of the
wealth and income of the country. If we are to have plan­ning
and a great scheme of cooperation, we are certainly not going
to consent that it shall be a legal rendezvous for monopoly. If
we are going to have this new scheme, the average man and
woman must be treated, not merely as an economic cog in a vast
machine but as human beings, hoping, aspiring, feeling, sentient
souls. The average man or woman cannot be reduced to economic
slavery, carrying the weight which kills, simply in the name of this
or that scheme. They are entitled to be treated as citizens and
to be protected against the rapacious charges of combines and
monopolies. If a plan is defective in that respect, it is nothing
but legalized robbery. I do not care what you call it.
39598—9824 o

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Full Text

THE CONSUMER AND
SMALL BUSINESS
Hon. William E. Borah
of Idaho
February 7, 1934
Printed in the Congressional Record of
February 8, 1934
(Not printed at Government expense)
Radio address
by
39598—9824
United States
Government Printing Office
Washington : 1934
RADIO ADDRESS
BY
HON. WILLIAM E. BORAH
Mr. NYE. Mr. President, I ask unanimous consent that
there may be printed in the Appendix of the RECORD a very
splendid address delivered over the National Broadcasting
chain last night by the senior Senator from Idaho [Mr.
BORAH].
There being no objection, the address was ordered to be
printed in the RECORD, as follows:
I am. deeply indebted to the National Broadcasting Co. for an
opportunity to discuss with you tonight a matter which seems
to me of very great moment.
Upon the subject which I am going to discuss, I have received
in the last few months thousands of letters, sometimes as high
as 300 letters a day. Necessarily, I cannot make answer personally
to all of these letters. X am in a sense undertaking to reply to
these letters tonight. I feel doubly indebted to the broadcasting
company for the opportunity.
The questions are two—but in a sense one and the same. The
first question is: Can the people, particularly the less-well-to-do
people of this country, and that constitutes now about 90 percent
of our people, be protected from unjust and extortionate prices
now imposed upon them through the price-fixing methods of
combines, trusts, and monopolies? Can those who, through great
industry and self-denial, are endeavoring to pull themselves out
of their present economic distress, be shielded from the cruel
exactions of monopolies? There are millions of people in our
country still in want of sufficient means to properly feed and
clothe and educate their families (a million children, it has been
published, are kept out of school in one city for want of proper
nourishment), who are now being driven to a still lower standard
of living because prices have been fixed at a point beyond their
reach. They are compelled to still further deny themselves
and their families the things they sorely need. And these prices
are being fixed without restraint, without hindrance, by combina­tions
and monopolies, passing under the euphonious terms of
" trade associations ", and the prices are being fixed regardless of
humanity or justice. This is the first question.
The second question is this: Can small business be rescued
from ruin—small business, independent business, which is the
real economic strength and backbone of the Nation? The same
combinations and monopolistic methods which are fixing prices
for the people generally are, through price-fixing and other mo­nopolistic
methods, destroying small business. This may seem
a strong statement, but it is not too strong; it is true. It can
be proven by the facts. I received in one day over 50 letters from
small business firms alone scattered throughout the land. These
letters tell the story of the battle which they are waging for
existence. In many instances the battle has been lost. The
second question, therefore, is: Can small business be saved from
utter destruction?
In order to fully understand this situation it is necessary to
go back in history. When the Industrial Recovery Act came be-
39598—9824 (3)
4
fore the Senate for consideration at the last session it provided
for the suspension of the antitrust laws, for all laws which had
for their purpose the control and restraint of combines and mo­nopolies.
When it came to be considered in the Senate I offered
an amendment for the purpose of restoring these antitrust laws.
The amendment was adopted by the Senate. It went to con­ference
and was there stricken out. A generalization with ref­erence
to monopolies was inserted which has proven wholly in­effective.
So the National Recovery Act became a law with a
provision therein suspending all antitrust laws. All effective con­trol
or restraint upon these powerful combinations were re­moved.
They have made good their opportunity.
It is my contention that the antitrust laws should be restored
and that they should be enforced. I do not believe it is possible
to protect the people of this country from exorbitant and unjust
prices or to save small business from utter ruin if these great
combines and monopolies are permitted to go unrestrained and
uncontrolled. I may say that I have pending now an amendment
to the Industrial Recovery Act which would restore the antitrust
laws.
It was thought by some, and is still by some contended, that
the antitrust laws, if in full effect, would conflict with the ad­ministration
of the National Recovery Act. If the National Re­covery
Act is to be executed and administered in harmony with
its true terms and its declared purposes, the antitrust laws would
not be a hindrance but a distinct assistance in its administration.
Neither in practical effect, in moral effect, or in law, is there any
conflict between the National Recovery Act and the antitrust
laws. The principal contention as to this phase of the matter
came from those who were most anxious to get rid of the anti­trust
laws and the principal objection to restoring the antitrust
laws comes from the same source. It is my contention that this
is a poor subterfuge, that these two bodies of law, the antitrust
and the National Recovery laws, can be made to work in per­fect
harmony for the welfare of the great body of the American
people. It is also my contention that unless the antitrust laws
are restored and enforced, the American people will continue to
be pillaged and robbed through extortionate prices and that small
business will continue to be crushed and driven into bankruptcy.
If the antitrust laws are not necessary for the protection of the
people and the N.R.A. can, without the aid of the antitrust laws,
protect the consumers and small businessmen, then why has it
not done so, and why does it not do so? What I am asking
tonight is: Who is responsible for these exorbitant prices and
for the harassing and destruction of small business? Everything
which the average person engaged in manual labor must pur­chase
has risen in price all the way from 67 percent to 150 per­cent.
Cotton towels have risen 87 percent. Did the N.R.A. do
that or consent to that, or was it those who sit about a table
and fix the prices of these articles? And if its machinery with­out
the aid of the trust laws can prevent such things, why is it
not used? Children's hosiery has risen 94 percent. Who is re­sponsible
for that? Men's wear, such as men's socks, have risen
67 percent; cheap shirts, 72 percent; overalls, 110 percent. This
is rather an important item to a large body of people in the
United States, whose purchasing power is at the lowest ebb. Who
is responsible for this, picking the meager pockets of the working-man?
I contend it is the result of combines, price fixing. Who
is it that is contending the N.R.A. is responsible for it?
I have a letter in my files from an elderly lady from the South
who says: "I am sending you a sample of knitting cotton which
sold last spring—1933—for 50 cents a pound. Now I must pay
90 cents a pound." And she asks, " Who gets this large profit? "
5Tes; who does? It is "my contention that the few who control
the sale of this particular product have raised the price nearly
double. I ask: Does the National Recovery Act and those who
39598—9824
5
are administering it need any help to prevent this extortion?
Has the " blue eagle " become a hawk? Certainly not. What is
happening is this. While the N.R.A. is seeking to restore purchas­ing
power, monopoly hovers around, soars down like a bird of prey
upon the citizen, and not only takes all gain from the laborer,
from the farmer, from the people generally but, while taking is
good, it takes more than the gain assured by the N.R.A. And
while it is in the act of extortion it is screaming " chiseler " to
all who object to being fleeced.
According to a monthly survey of business, put out by the
American Federation of Labor sometime ago, a 6-percent increase
in wages was more than eaten up by an 8.5-percent increase in
living costs. In other words, the laborer is more than paying as
a consumer for his increase in wages. He is worse ofl by 2.5 per­cent
than he was last March. Using the figure of 100 to represent
pre-war prices, the Bureau of Agricultural Economics index
showed farm prices on August 15 at 72, as compared with 76 on
July 15, and 64 on June 15. The prices of things the farmer buys
were 103 on June 15, or 3 points over the pre-war. This moved
to 107 on July 15 and reached 112 on August 15. What a perfect
scheme. As the farmer's prices increase, the prices of the things
which he has to buy increase so as to remove all possible gain to
the farmer. Just so long as a few men sit about and fix prices
upon the things which the farmer has to buy, the farmer will
never be able to enjoy that equality with industry which has
been promised. Those who can control prices can always keep
just ahead of the prices of the commodities from the farm.
At the present time it is perfectly clear that monopoly is
gathering up everything which the average man and woman might
reap in the way of benefit from the present recovery program.
These monopolies and combines can, so long as they have unre­strained
power to fix prices, deprive the people of any opportunity
to make any real gains in their income or in their standard of
living. With the antitrust laws suspended these monopolies are
restrained neither by the feelings of remorse, the stings of con­science,
or the fear of punishment. They are now free and un­trammelled
to extort the last cent they can from the people of this
country and to harass and drive small business to its desperation
and ruin.
Let me quote briefly from letters of small business. Under date
of January 22, from New York, the writer says: "In almost every
industry there are large units. These large units are made up of
a number of concerns being merged together. In ninety-nine cases
out of a hundred, where these mergers take place the concerns
are overcapitalized. Now these concerns that are overcapitalized
attempt to make a profit on the overcapitalization with the re­sult
they have to get exceptionally high prices for their merchan­dise.
Such concerns are not able to compete with small units
except by price fixing. And if they can fix the prices for the
entire industry, they will naturally fix them high enough for
themselves to make a profit. And if the little man should get the
business, he would make a profit out of all proportion to what he
was entitled and what he would ask for if he were permitted to
sell the goods in his own way. But the real trouble exists where
one price is fixed in an industry, the larger units are usually
the people who get all the business and the small units get
nothing."
Here is the secret, both of high prices and of injury to small
business. The people are paying on overcapitalization and are
not permitted to pay on the basis of honest capitalization. The
high prices they are compelled to pay not only covers overcapitali­zation
but they cover high salaries, and many of them. Small
business is not permitted to sell upon a basis of honest capitaliza­tion
or reasonable salaries.
39598—9824
6
Another letter under date of January 30 says: " There may be a
lot of good in the N.R.A., and incidentally there may be a lot of
harm. In the opinion of the writer, unless immediate steps are
taken to correct the representation constantly being made by
monopolies, it will only hasten the time when there will be no
need for the N.R.A. May I ask if the N.R.A. is supposed to help
the masses, or is it supposed to add more money into the pockets
of the very selfish class? " This is a business house in Brooklyn.
Let me say to the writer that the N.R.A. is supposed to benefit
the masses. The law was passed for that purpose. The objective
was a righteous one. But monopoly put one over on the framers
of the National Recovery Act in securing a repeal or suspension—
which amounts to the same thing—of the antitrust laws. It is a
notorious fact that big business made it known they were not
willing to get in and cooperate unless the trust laws were sus­pended
or repealed. For thirty-odd years an effort has been put
forth here in Washington to repeal or emasculate the antitrust
laws. Here was the opportunity and they succeeded. And the
people are paying for the mistake.
A business house from Kansas City, Mo., writes: "Entrenched
industry and capitalistic industries can use this new set-up even
more selfishly than they were able to use it under old methods."
The writer goes on to state how, through monopolistic practices,
such as price-fixing, they are ruining small business. Another
small business firm in Brooklyn says: "Representing a small busi­ness
struggling for existence, we are at the mercy of monopolies
who control raw material and consequently prices. Under the
guise of the N.R.A., the industries have raised prices 30
percent on items the price of which was the same from 1928 to
about 1933."
A business firm from Wisconsin says: "They themselves tell us
that if we were to ask 20 manufacturers for quotations,
their prices would be so identical as not to vary one cent. Not
only that, salesmen now openly boast that their concerns
have a large bond posted with the ring, which is to be for­feited
the minute they cut the prices set by the combine. Many
of these companies have boosted their prices by 60 percent, with
no excuse of processing taxes to Justify this advance." Another
letter from a business man at Jacksonville, 111., says: "Without
the antitrust laws in effect, small business cannot survive."
I shall not, for want of time, quote further. But these letters
are coming from all parts of the United States and from men
anxious to keep in the recovery program. But they also want the
right to live, to continue business. And it is the duty of the
Government to all that they enjoy the right to live and continue
business.
Since this discussion about the small business man has arisen,
I had a conversation with one of the prominent figures in one
of the great industries in the country which is under a code. I
do not feel justified in using his name, but he made this state­ment:
"Senator, you must realize that the small business man
is passing out. He does not belong in our modern industrial
development. It is not in the interest that a business should
be conducted upon the theory that he must be retained. It is
natural for us to sympathize with him, but the philosophy of the
present constructive program is against him."
Gasoline is a necessity, as modern society is now organized,
to the American public in an extent exceeding 2 y2 pounds daily,
for every man, woman, and child in the United States. Its price
is, therefore, almost as critical as the price of bread and meat.
The domestic consumption of gallons in the year 1933, as reported
by the United States Bureau of Mines, was 378,143,000 barrels, 42
gallons each; 378,143,000 multiplied by 42 makes 15,882,006,000
gallons. An increase of 1 cent in the retail price per gallon
means an increase of $158,820,060 annually, or $435,000 daily, at
39598—9824
7
the 1933 rate of consumption. Since last June the price of gaso­line
has increased over 30 percent. In June it was about 12'/2
cents a gallon and has gone up to an average of 16 cents a gallon.
The major companies are in a position to fix prices and to drive
out of business the small independent oil men.
My State produces a large amount of lumber. 1 know most of
those engaged in the business. Naturally I have only the friend­liest
feeling for the industry. But let me call your attention to a
statement furnished me by a western lumber company. This
statement says:
" In the week of February 5 to 11, 1933, we sold retail $276.18
worth of lumber consisting of 120 different items. On November 3.
1933, our retailed price on. this same material was $445.49, showing
an increase of 61 percent over the February 1933 prices. Today's
price (Feb. 1, 1934) is $484.90, an increase of 9 percent over
November 3, 1933, prices, and 75 percent over February 1933. And
now, under the new minimum selling price established by the
code, this selling price has increased another $71.40 to $556.30, a
jump overnight of 15 percent and 25 percent over November 3,
1933, prices, and 101 percent, or more than double, the February
1933 prices. These exact figures are taken from our records."
Balzac, the great French novelist, once said that money never
loses an opportunity to be stupid. It seems to me that economic
power never loses an opportunity to be stupid. These prices will
in the end injure the lumber industry. People who want to build
a home will not build a home; they cannot build it. Farmers who
want to improve their barns and granaries or build new ones will
not do so. They will either do without or find substitutes. But
such is the program that is now being carried out.
The Secretary of the Interior, Mr. Ickes, is a hard-working, able,
conscientious, courageous public servant. But he has some most
peculiar ideas. It is difficult to understand him. To illustrate:
He believes that the taxpayers who must pay these great bills are
entitled to some protection. He insists on competition in the
matter of bidding for public works. He believes the Government
cahnot be protected if these bidders for public works are permitted
to get together and put in the same bids. He goes so far as to
say these people who get together and put up prices on the Gov­ernment
are crooks, or something to that effect. And he seems to
think they are such, regardless of what their politics may be.
Now, Mr. Ickes has been much criticized for these ideas. But
I venture to think he is right. The taxpayer ought to be protected
and the Government ought not to be jipped by a combination of
bidders. But if the Government is entitled to the benefit of com­petition,
if the Government is entitled to protection against fixed
bids and thereby fixed prices, are not the people entitled to pro­tection
against price fixing? If a farmer wants, for instance, to
buy a farm implement, he could travel from San Francisco to New
York and he would, I suspect, find the price the same all the way
along, fixed by somebody and fixed at an unconscionable point.
If a workingman wants to buy a pair of overalls, he might travel
from the Canadian line to the Gulf, but he would likely find the
same price. And he would further find that if some small business
man felt that, owing to his less highly watered business, he was
willing to sell for a lower price, he would be put in jail. Now, my
friends, this is all wrong. It is an injustice to the whole people.
And in many instances and in many respects it cannot be de­fended
morally any more than the exactions of Dick Turpin on
the London road.
Billions of dollars are being expended by the Government to
restore prosperity. When the game is played through, in whose
possession is this money? Largely in the possession of trade asso­ciations,
combines, and monopolies, which have the power to fix,
and are fixing, prices. If workingmen get a little higher wage, it
is taken away by the higher prices of things they must buy, and
they are unable to save a dollar. If the average man or woman
39598—9824
makes a gain somewhere, the cost of living goes up and they are
no better off—the situation is not changed. If the farmer receives
some benefit from some policy of the A.A.A., the monopolies and
combines, which operate under the N.R.A., take it away. Last
summer when the packers came to the conclusion that the con­sumers
would not carry the processing tax, they made themselves
safe by reducing the price of hogs. Play the game as you will, the
monopolies, who are able to fix prices, will win.
What benefit is it to the laborer to raise wages if a few com­panies
may raise prices to rob him of the benefit of the raise in
wages? What is the use to kill pigs and reduce acreage if the
harvester combine, the packers, and the major oil companies can
put up prices so as to grab off to themselves all the benefits?
Until we can increase the purchasing power of the masses, until
they can buy more, not less, as they are doing now, until they
can make some savings, there can be no permanent prosperity.
Prices should be kept down within reason and the price of labor
raised and unemployment decreased. When that is done the
increased demand for goods, for the things which men and women
must have in order to live, that of itself will stimulate business,
and that stimulation will normally raise the prices of articles
which the people need. But to raise prices first, as monopoly is
doing, is simply to hold labor down, likewise the producer, to the
bare level of existence. With the price-fixing power in the hands
of those interested in charging all the traffic will bear, there is no
hope of restoring the purchasing power of the masses and no hope
of prosperity until that is done.
When these conditions are pointed out someone goes into a
trance and begins to ejaculate about how we cannot go back to
" rugged individualismthat we have arrived at a new era, the
era of planned industrialism. I do not care to enter into a dis­cussion
as to the merits or demerits of rugged individualism or of
planned industrialism. So far as the subject I am discussing
tonight is concerned, I am not interested in that question. What
I have to say is that it matters little what you call it; if com­bines,
trusts, and monopolies dominate the program, it is just the
same to the people, whether you call it rugged individualism or
planned industrialism. It makes little difference to the consumer
paying extortionate prices or to small business fighting for its
life against monopolies whether you call the process rugged indi­vidualism
or planned industrialism. If monopoly is permitted to
have :ts way under both schemes, permitted to fix the rules of
the ga...e under both schemes, the results are the same to the
people. Any scheme, whatever you may call it, which does not
protect the individual citizen from unjust charges and prices,
which fails to insure to him economic Justice; any scheme which
does not give small and independent business a fair chance in the
struggle for existence, is a libel upon government, a travesty upon
justice, and a brutal indefensible system, regardless of whether
you call it new freedom, old freedom, rugged individualism, or
planned industrialism. The test is whether the citizen is free
from these injustices and is permitted to have his portion of the
wealth and income of the country. If we are to have plan­ning
and a great scheme of cooperation, we are certainly not going
to consent that it shall be a legal rendezvous for monopoly. If
we are going to have this new scheme, the average man and
woman must be treated, not merely as an economic cog in a vast
machine but as human beings, hoping, aspiring, feeling, sentient
souls. The average man or woman cannot be reduced to economic
slavery, carrying the weight which kills, simply in the name of this
or that scheme. They are entitled to be treated as citizens and
to be protected against the rapacious charges of combines and
monopolies. If a plan is defective in that respect, it is nothing
but legalized robbery. I do not care what you call it.
39598—9824 o